Over the next two decades, Baby Boomers are expected to pass down more than $84 trillion, making it the largest wealth transfer in U.S. history. For many families, this inheritance represents a life-changing opportunity, but it also comes with important financial challenges. Navigating an Inheritance: What to Do First Before making any decisions, take time to process your loss. Once you’re ready, gather all key legal and financial documents such as wills, trusts, account statements, and property titles. Not all assets are taxed or distributed the same, so understanding what you’ve inherited is essential. For example, an inherited IRA from a non-spouse falls under the SECURE Act and must be emptied within 10 years of the original owner’s death. If a trust is named a beneficiary, the tax bill can hit faster, so it’s important to establish that quickly. A taxable brokerage account is simpler because you get a step-up in basis to the date-of-death value, meaning little or no capital-gains tax if you sell soon. Non-qualified annuities are trickier. Earnings come out first and are taxed as ordinary income, and most contracts force you to cash out within five years or start lifetime payouts. Common Inheritance Mistakes to Avoid Without careful estate planning, it’s easy to make costly mistakes. One example is naming a trust as a contingent IRA beneficiary without understanding the tax implications. Another is leaving an IRA to one person and expe
Our team employs external financial research from many different economists, analysts and research firms. This research provides valuable input into how we actively monitor and manage your portfolio. Periodically, we share this research with you in addition to our own analysis and market commentary. Linked below is a piece from Brian Westbury at First Trust about the timely topics of the recent U.S. debt downgrade by Moody’s, and what it all means in relation to the U.S. fiscal situation. In our view, the current fiscal situation calls for both spending cuts and policies to spur economic growth and efficiency. We think Congress will eventually figure this out over the coming years, but the bond market may have to push them first. Enjoy the analysis from First Trust, and thanks for your confidence in our team at Lineweaver! Please click here to
By Mark Sipos, LFG Tax Director When it comes to building a smart financial strategy, understanding how your income is taxed is just as important as how you invest it. That’s where the concept of the three tax buckets comes in — a helpful framework used in tax-efficient investing and retirement planning to help you minimize your tax burden and maximize your income. The first tax bucket is ordinary income, which includes your wages, pensions, Social Security, and interest from CDs, high-yield savings accounts, and money market accounts. These income sources are taxed at your marginal income tax rate, meaning the more you earn, the more tax you pay. Many people don't realize that interest income stacks on top of other income, potentially pushing them into higher brackets. That’s why understanding after-tax returns is critical when evaluating fixed-income investments. The second bucket is for capital gains and qualified dividends. This includes gains from selling stocks, ETFs, mutual funds, and real estate. Short-term capital gains (assets held under a year) are taxed at your ordinary income rate. Long-term capital gains (held for a year or more) are taxed at more favorable rates — 0%, 15%, or 20% depending on your income. Many married couples can earn over $100,000 and still pay 0% capital gains tax, thanks to the standard deduction. This makes capital gains a key part of any tax planning strategy. The third bucket is the tax-free income bu